AE12: Economic Development

Module no.: 9
Module Title: Monetary and Fiscal Policy

Writer: Adrian Z. de Lumen, LPT, MM

Opening prayer:

Heavenly Father,

Thank you for the talents and gifts you have given me and for the opportunity
of education. As we begin this module, Lord, please open my eyes to new
learnings. I pray for wisdom as I engage to learn through this module for clear
mind as I read and view the materials I pray that the knowledge I may gain
here will transform my heart and mind to follow you more and be of service to
my fellowmen.

May you be glorified, Lord. We ask this in the name of Jesus Christ our Lord
through the intercession of Saint Dominic De Guzman, and Saint Thomas
Aquinas.
Amen.

Topic 9: Income Inequality

MODULE INTRODUCTION AND FOCUS QUESTIONS:

In relation from the previous module about income inequality, the
government must bridge the existence of gap. Now the question is how can the
government address this issue? What are the policies that may help in bridging

Adrian Z. de Lumen
Instructor, AE12
adriandelumen@gmail.com / 09198144813
 AE12: Economic Development

the gap of rich and poor in the Philippines? Let us find out as we continue
learning here in economic development.

MODULE LESSONS AND COVERAGE:

This module has the following coverage:

Lesson Topics I should be able to Estimated time
…
Subtopic 1 Monetary and  Differentiate 6 hrs
Fiscal Policy monetary from
fiscal policy.
 Apply Monetary
and Fiscal Policy
to solve
economic
problems.
 Identify the
shortcomings of
monetary and
fiscal policy.

Reminder: To do well in this module, you need to remember and do the

following:

1. Open the indicated website if there is any.

2. Take down notes and copy some important link so that you could go back
whenever you need information given in that site.
3. Review videos/articles as many times as needed
4. Make your google classroom account and enrol yourself to (section to follow).
Make sure to use your complete name as username.
5. All activities, exercises, and pre and post assessment must be answered and
compiled in 1 document (Please see separate document or answer sheet).

Adrian Z. de Lumen
Instructor, AE12
adriandelumen@gmail.com / 09198144813
 AE12: Economic Development

Your compilation must be submitted within a week after receipt of this module
in google classroom.
6. Pls. contact your instructor if there is any confusion thru this phone number
09198144813 or thru facebook messenger with this link
https://web.facebook.com/adrian.delumen.

PRE-ASSESSMENT:
Let’s find out how much you already know about this module.
True or False: Write T if the statement is true, F if the statement is false.
_____ 1. Inflation and unemployment are permanent characteristics of the less
developed countries.
_____ 2. Inflation is the uninterrupted decrease in the price of goods and
services for a period of time.
_____ 3. A low purchasing power becomes even lower during inflation.
_____ 4. Foreign loans can cause inflation.
_____ 5. When demand is greater than supply it can cause inflation.

This pre-assessment was just to make you more curious about the income
inequality. To correct our misconceptions in the topic let us explore below.

Study: Let us explore below.

Activity 1: Analyze the image below and answer the question that follows.

Adrian Z. de Lumen
Instructor, AE12
adriandelumen@gmail.com / 09198144813
 AE12: Economic Development

Process question:
1. What do you think will happen if there is an imbalance of demand and
supply?

End of STUDY:
Your understanding of the topics will be increased as you study the lessons and
perform the activities in the RESEARCH phase.

Research: Let us firm up your understanding!

Your main goal in this section is to learn and understand some key concepts by
working on the following question:
 What is fiscal policy?
 What is monetary policy?

Activity No. 2:
You have to watch the video first. After internalizing the video, try to answer the
process questions below.

For offline students: Please press control + click the image below for the linked
offline video. (If it does not work, open the video manually: “AE Video Module 9
Activity 2”

Adrian Z. de Lumen
Instructor, AE12
adriandelumen@gmail.com / 09198144813
 AE12: Economic Development

Please visit the link below

https://www.youtube.com/watch?v=bv-uNNkE39I
(If the link does not work by clicking, copy and paste it to a web browser)

Process questions:
1. What is the difference between monetary and fiscal policy?
2. How does No policy work in neutralizing the economy?

Important concepts:

Continue reading. . . . . . (control + click the link)

(If the link does not work, open the file manually: “Reading Material 9 -
Monetary and Fiscal Policies”)

Exercise 1: Identify the policy being identified or can be associated with the
following items. Write M for monetary policy, F for fiscal policy, and N for no
policy.

_____ 1. The tool being used is money.

_____ 2. The tool being used is time or the people only wait.
_____ 3. It is an effortless policy though it may take time.

Adrian Z. de Lumen
Instructor, AE12
adriandelumen@gmail.com / 09198144813
 AE12: Economic Development

_____ 4. The tool being used is taxation.

_____ 5. Government spending can help in economic recession.

End of RESEARCH:
In this section, the discussion was about the economic policy that may help in
addressing inequality and economic recession. After you have gone into this
section, have you answered the question, “How can these economic
policies help?”.

CLOSURE:

SELF REFLECTION: Kindly put a check on your honest response given the
learning skill.
Learning With confidence Not sure though A little bit
outcomes confused
 Differentiate
monetary
from fiscal
policy
• Apply
Monetary and
Fiscal Policy to
solve economic
problems..
• Identify the
shortcomings of
monetary and
fiscal policy.

Adrian Z. de Lumen
Instructor, AE12
adriandelumen@gmail.com / 09198144813
 AE12: Economic Development

Before you go to the post test, assess yourself using the self-reflection if you are
ready, if not you may reach me via messenger or sms for your queries.

Post-Assessment:
True or False: Write T if the statement is true, F if the statement is false.
_____ 1. Inflation and unemployment are permanent characteristics of the less
developed countries.
_____ 2. Inflation is the uninterrupted decrease in the price of goods and
services for a period of time.
_____ 3. A low purchasing power becomes even lower during inflation.
_____ 4. Foreign loans can cause inflation.
_____ 5. When demand is greater than supply it can cause inflation.

Summative assessment:
It’s now time to evaluate your learning.

I. True or False: Write T if the statement is True and F if the statement is False.
[1 pt]

_____ 1. These economic policies can ensure price stability.

_____ 2. Fiscal policy is one way to improve the condition of unemployment.
_____ 3. Fiscal policies are intended not just to stabilize economy but to provide
public goods and service.
_____ 4. Expansionary monetary policy increases the government spending.
_____ 5. Monetary policy refers to taxes and expenditure of the government.
_____ 6. Gold is anything that can be used as medium of exchange today.
_____ 7. Contractionary fiscal policy intends to decrease the level of money
supply in the economy.
_____ 8. High cost of production can contribute to inflation as one problem of
economic development.
_____ 9. Commonly, for less developed countries, unemployment is high.

Adrian Z. de Lumen
Instructor, AE12
adriandelumen@gmail.com / 09198144813
 AE12: Economic Development

_____ 10. Bonus  Congratulations Everyone

Closing prayer:

Dear Lord,

I have invested a great deal in this module with honest and noble intentions. I
have made sacrifices as you have made sacrifices for us. I have used the gifts
you have given me, remained steadfast and focused, and have put my heart
and soul into this module. I pray for intercession and honest reward through
Jesus Christ, whom all good things come from. Amen.

Sources:
Fajardo, F.R., 1994, Economic Development third edition
https://www.merriam-webster.com/dictionary/determinant
https://dictionary.cambridge.org/us/dictionary/english/determinant

Adrian Z. de Lumen
Instructor, AE12
adriandelumen@gmail.com / 09198144813